Apr

25

There has been a run of exactly 5 up opens (i.e. a rise from yesterday's close to today open) in the S&P [see price sheet below]. This has been bestowed upon us 15 times in the last 4 years. Strangely this is not unduly bearish at all for subsequent periods (exactly 6 up opens in a row occurred 9 times). The number of runs is consistent with randomness. Does this have anything to do with the news that central banks all over the world are increasing their stock to bond ratios on their balance sheets (i.e. they're buying stocks as well as bonds with the money they print?). What is the long term outlook for such a shift?

John de Regt writes:

Hard to say, but the bond and stock purchases might one day be unwound, which would cause markets to fall. That said, the Fed might very well hold their debt securities to maturity, and never sell off.